America’s Love Affair with Libyan Oil

This may seem like ancient history to some but I am amazed that there are no background stories about Libya and its relationship with our country prior to and during the time of the Energy Crisis. It really is not that long ago if you take a longer view of history. One Chinese official when asked what he thought about the French Revolution said it was “too soon to tell.”

My son and probably most music lovers can detail much of the popular music of that period whether its the Rolling Stones or Sly and the Family Stone. We know arcane facts about music and entertainment from this time though bmany of us were actually stoned at least part of the time. We know about as much about our important consumer relationship with Libyan oil as we know about the Funk Brothers. The fact that we know little about mid 20th to late Libyan history and the Funk Brothers is strangely Orwellian.

Furthermore Libya actually has a special relationship to Californians and played an important role in our growth spurt during the 60’s and 70’s. The untold story about our relationship with Libya is a story about empire. The modern American version is not just one about the confrontation of imperial nations and the developing world but also between giant corporations and the developing world often between giant corporations and the resources of developing countries.

The Libyan story is about the major oil companies and how they controlled and repressed the development of oil in many countries. From the developing worlds perspective its what some people call the resource curse.

Back in the early days of cinema a cartoon very accurately depicted this relationship with a character scrambling to stop oil from squirting out of the ground in a half dozen places. The major oil companies knew where the oil was and knew that there was lots of it and also knew that if they developed more oil than the market could use that the glut would mean “distressed prices”. So the strategy of the big oil companies was to keep a lid on development and jerk the oil-producing countries around, promising them much more development in the future.

Iraq would have plenty of historic material if the wanted cut a Blues album with the way the major oil companies played Iraq for much of the 20th century. They began way back in 1925 through a major oil company consortium Iraq Petroleum Company, IPC.

Throughout Iraq history, they were told,”Hold on, give us a few years” — but they didn’t come and held down production instead. They even didn’t let the Iraqis know how much oil they had! PC kept production to 1 percent of the countries potential oil production area. Time and again they kept the Iraqi development under raps referred to it as the “dog in the manger “ policy.

Big Oil policy could be refined down to ”We’ll do what’s good for a handful of our major shareholders instead of what’s good for the millions of people in your country, thank you .” Today’s Iraq with our help live with electricity which is off more than its on while Iraqi temperatures reach 120 degrees, weapons of mass destruction was even more of a scam than “the dog in the manger” hoax which has lead to the deaths of hundreds of thousands of innocent civilians.

Libya was another story. They were able to break the stranglehold of the major oil companies and for that, we Americans, through our media propaganda machine via the State Department at the behest of Big Oil have hated Qudaffi for decades. And now with the Arab Spring in the air the opportunity for the attack through NATO. Libya did something that was as American as Adam Smith eating apple pie, they decided to try to get as good a price as they could for their product and even more Americano, sold it to customers who were willing to buy more of it than the oil giants .

After the coup that brought Qadaffi to power in 1969 , they increased production 20-fold through independent oil companies and European customers, especially Italy. This infuriated the oil cartel BY creating what they considered a dreaded “outbreak in oil competition.” But as apple pie as free enterprise and the freedom to sell to whomever would be best for your you and your product.

Several factors also made Libyan oil unique. Unlike our burgeoning tar shale source, it was relatively clean crude, very low in sulfur content and it was also very close to European delivery ports compared to Middle EasterN countries. Tankers from Libya could make two trips back and forth to Europe in the same time as Middle Eastern sources made one trip. With regards to the U.S markets the small companies were “eating the giants lunch” mainly because the good ole boys of the major oil companies had their service stations primarily located in the inner cities before the suburban housing boom.

The small independent companies were performing their version of guerilla marketing, by opening up stations at strategic suburban locations, generally at off ramps of the new American highway system and sprawling suburbs. California’s population boom and love affair with the automobile often had music arranged by the Funk Brothers on their car radio and Libyan oil in their tanks.

To the horror of Chevron (then Standard Oil of California), they saw their market share starting to take a serious dip. George Keller, the eventual CEO of Chevron, testified to Congress in 1973 that the name of the game was controlling oil — controlling who produced it and who sold it or what is now known as the Control of Oil theory.

To stifle the independents’ development any further, Exxon’s chairman met with Saudi Arabia’s minister of oil in 1975 to curtail production, driving up prices. The new coalition of OPEC and the major oil companies are arguable the masters of the universe or at least the planet. They feed off each other and have been technically referred to as a “bilateral symbiotic oligarchy.”

Whenever the price goes up the oil companies point to OPEC to blame and we and our leaders buy their line, yet their profits rise with every oil spike because they make their “percent” whether its at $40 or ideally $140 a barrel and we as consumers have little choice but to pay for the spike at the pump.

The meeting in 1975 between Exxon and Saudi oil leaders may have been arguably the beginning of the end of the American Dream, since from then we were hit by what’s called the “decade of inflation” and the beginning of the deindustrialization of our country. Since then, the average person hasn’t had a real pay raise.

The oil companies were also not opposed to the deindustrialization because a globalization of corporate production meant more roads, more development and more gallons of their product sold internationally. European public opinion today is not as enthusiastic about the NATO attacks as we are probably because they know more about their history with Libya. Our propaganda machine has trained us to snarl at the Libyan leader and his frizzy hair and non Western garb, but we may well be wondering what’s happening at the pump when because of the invasion prices take a serious spike.

Beyond our consumer fetishes the fact that Libya’s liberation from Big Oil story isn’t even covered is very disturbing. It can be expected of the mainstream media but Left-leaning journalists should have at least done their homework on this issue. Arguably, it is both interesting and very important.

A good place to start could be John M Blair’s The Control of Oil, considered in the 70’s to be the definitive history of oil. It’s a story about a product that one can maintain eventually destroyed the American Dream and more than likely will destroy a large percentage of civilization on our planet, through its waste product and climate change.

Americans should also know more about the Funk Brothers who played on more hit songs than the Beach Boys, the Rolling Stones, Elvis and the Beatles combined. A good history of their work is available on the DVD Standing in the Shadows. Through both the gas tank and the car radio Orwell ‘s theory is more real than many may think!

Comments

A very loosey goosey account which omits relevant chronology, and utterly misrepresents and suppresses key facts of the period 1969-1975, especially for year 1973.

The article fosters the impression that what the Libyans primarily did after 1969 – having nationalized their fields – was increase the supply of oil. The article utterly forgets to add the significant fact – that the increased supply was NOT accompanied by price reductions but on the contrary.

The Libyans did NOT compete with and undercut Big Oil. They did NOT reduce the price. Rather, they used their preferred supplier position to RAISE the price.

Big Oil fell in line with and passed on the Libyan increases. Big Oil went further, saw an opportunity to squeeze the USA market, and started talk of an ‘energy crisis’.

And so USA gasoline prices were raised to unprecedented levels already in SUMMER 1973.

The FALL 1973 attack on Israel, and then the follow-up Arab oil countries’ cutoff of oil to the USA, was made the pretext for even larger price rises and much more talk about ‘energy crisis’. So much more that people were later encouraged to forget that the talk from Big Oil had started earlier, even in SPRING 1973.

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